CFPB Issues New Proposal on International Remittances

Agency also delays the final rule’s implementation date.

January 21, 2013

The Consumer Financial Protection Bureau (CFPB) has proposed revisions to its final rule on international remittances and has delayed the rule’s implementation from Feb. 7 until 90 days after it issues the new final rule.

This proposal focuses on:

►Disclosure of foreign taxes and institution fees. The proposal would provide increased flexibility and guidance regarding the disclosure of taxes imposed by a foreign country’s central government, as well as fees imposed by a recipient’s institution for receiving a remittance transfer in an account.

►Disclosure of subnational taxes in a foreign Country. The proposal would require disclosure of foreign taxes imposed by a country’s central government, but would eliminate the requirement to disclose taxes imposed by foreign regional, provincial, state, or other local governments.

►Errors from incorrect account information. Under the proposal, when the provider can demonstrate that the consumer provided an incorrect account number (and when certain other conditions are satisfied), the provider would be required to attempt to recover the funds—but it would not bear the cost of funds that can’t be recovered.

The CFPB expects to confine changes to these areas. However, CUNA’s advocacy efforts with the agency will continue in an effort to improve the entire international remittance rule, including the current 100 transfers per year exemption level. The agency is not planning to increase the exemption level at this time.

“We remain very concerned about this and will continue to pursue it with the agency and with other policymakers,” says CUNA President Bill Cheney.

In light of this development, CUNA will provide a new comment call and will hold a conference call in January to discuss the proposal with credit unions and leagues.

The holiday season is a busy time for remittance transfer providers, particularly among Hispanic communities, says Anna Peña, client account coordinator for Coopera.

But with many issues complicating the availability of these services, U.S. Hispanics may soon be looking for new remittance providers—providing an opportunity for credit unions, she says.

“Once the domain of Latin mom-and-pop shops, remittance services have in recent years become accessible to Hispanic and other consumers through their local credit unions,” Peña says. “Beyond simply allowing consumers another choice, providing remittance services also gives credit unions the chance to deliver more comprehensive financial services to a largely underserved population.”

It’s important to understand, however, that remittances aren’t necessarily a tool for attracting new Hispanic members, she says. Credit unions should view these services more as a value-added tool to increase the depth of their product suites.